Australian bonds narrowly mixed ahead of OPEC ministerial gathering

The Australian government bonds traded narrowly mixed Tuesday as investors await the OPEC ministerial gathering, in which oil producing countries are expected to strike an agreement on output cut.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 1 basis point to 2.70 percent, the yield on 15-year note climbed 1-1/2 basis points to 3.12 percent and the yield on short-term 2-year inched 1-1/2 basis points to 1.84 percent by 04:30 GMT.

The Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Reserve Bank of Australia's target. Crude oil prices fell on worries that the OPEC will be able to cut production output cut during a meeting on Wednesday. The International benchmark Brent futures fell 0.50 percent to $4.9 and West Texas Intermediate (WTI) dipped 0.6 percent to $46.7 by 04:40 GMT.

The Organization of the Petroleum Exporting Countries (OPEC) is meeting officially in Vienna on Wednesday to discuss a planned production cut in an effort to curb overproduction that has dogged markets and more than halved prices since 2014, Reuters reported.

With a high degree of uncertainty going into the last 24 hours before the meeting, oil price volatility is expected to be high. There remains disagreement among OPEC-members over which producers should cut by how much, and a plan for non-OPEC oil giant Russia to participate has so far also failed, they added.

The Reserve bank of Australia in its November meeting minutes mentioned that the underlying inflation is expected to return to normal levels over time and the Australian economy is seen growing close to potential over the next few quarters, before picking up further.

Further, the minutes repeated that a rising Australian dollar could complicate the economic transition and holding policy rate steady in November meeting was consistent with growth and inflation goals. It further mentioned that a steadier Chinese economy had reduced downside risks to global growth outlook, while risks to global inflation outlook more balanced than for some time.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded flat at 5,469 by 04:50 GMT. While at 04:00 GMT, the FxWirePro's Hourly Australian Dollar Strength Index stood neutral at +37.08 (higher than +75 represents purely bullish trend).